Dollar Weakens, Yuan Rises
The U.S. Dollar fell in early European trade on Tuesday, while the Chinese renminbi rose on hopes that the Chinese government will ease travel restrictions and increase risk appetite.
The Dollar, which measures the value of the U.S. Dollar against a basket of six other currencies, fell 0.4011% to 106.165 after rising 0.510% overnight.
China reported its first drop in daily infections in more than a week on Monday. Civil unrest erupted over the weekend due to the country’s prolonged mobility restrictions.
On Tuesday, the country’s National Health Commission announced that it will present measures to accelerate vaccination of people over 80, a vulnerable age group in which more than one-third are still unprotected.
This is the first obvious sign of official intent since the anti-government demonstrations. According to traders, the Chinese government may be starting to relax its anti-COVID regulations.
USD/CNY fell 0.701% to 7.15912, retreating from the previous session’s two-week high after protests and record-high COVID infections raised concerns about the world’s second-largest economy’s growth potential.
The U.S. dollar rose on Monday. It received a boost from its status as a haven currency. Moreover, it also rose from more hawkish comments from Federal Reserve policymakers.
With the focus on Eurozone inflation, the EUR/USD rose 0.5% to 1.0387.
In November, Spanish inflation rose 6.8% yearly, a 0.1% decrease from the previous month’s 7.3%. German CPI figures are also due later in the session, ahead of the Eurozone CPI data on Wednesday.
In a Monday speech to the E.U. Parliament, ECB President Christine Lagarde stated that the region’s inflation has not peaked and could be even higher than expected.
GBP/USD rose 0.5% to 1.2022. AUD/USD gained 1% to 0.6716. Moreover, USD/JPY fell 0.5% to 138.25, despite retail sales data for October falling short of market expectations.